The gamble

Reconfiguring the Stadium District and how a pair of attorneys came to believe in bringing a casino to Lansing

Virg Bernero says he’s wanted a casino in Lansing ever since he was elected mayor in 2005.

He expressed this desire on several
occasions since then, particularly once after appointing City Attorney
Brig Smith in March 2006.

“When I started, the mayor said ‘I want
a casino here,’” Smith recalled on Monday after the unveiling of the
Kewadin Lansing Casino plan. “I said I’d like to be 6-foot-7 and play
in the NBA.”

Smith — with a thin, roughly
5-foot-7-inch build — still doesn’t play professional basketball and
probably never will. But he now believes Lansing has a sound legal
argument for bringing a casino to Lansing, an about-face of where he
was on the issue six years ago. Smith said he was involved in casino
litigation before he came to the city with his former employer,
Honigman Miller Schwartz and Cohn LLP in Lansing. Particularly, he
worked on legal issues with the “big three” casinos in Detroit, he said.

“In the next several weeks and months
we’ll have a lot of armchair legal experts” saying it won’t work, “but
I am convinced it will in the long run work,” Smith said Monday. “I’ve
become a believer in this thing. The Sault Tribe is probably in the
best position to pull this off.”

And then there’s John Wernet, who was
hired as the general counsel to the Sault Ste. Marie Tribe of Chippewa
Indians in June. The Sault are working with the city on the casino
plan. Wernet and Smith are part of the legal team trying to see the
casino deal through.

“When I got involved, I initially was
very skeptical,” Wernet said Monday afternoon. “We put a lot of time in
carefully evaluating theories. I’m confident we’re on sound legal
ground. That’s different from saying we’ll necessarily win, but I have
a high degree of confidence in the theory.”

Wernet formerly served as Gov. Jennifer
Granholm’s deputy legal counsel and has more than 30 years’ experience
working on tribal issues.

The city and the Sault are hanging their
hats on a provision in the Michigan Indian Land Claims Settlement Act
of 1997 that they say makes the Sault unique from the other Chippewa
and Ottawa tribes included in it. The act outlines the use and
distribution of judgment funds for those tribes from the Indian Claims
Commission. It sets up “self-sufficiency funds” to be used by the
tribes.

Some legal experts dismiss the Lansing
plan because of ongoing federal litigation between the Bay Mills Indian
Community and the state in which the Bay Mills Community tried opening
an off-reservation casino with money from its self-sufficiency fund.
The case is before the 6th Circuit Court of Appeals.

But Wernet and Smith are quick to point
out that the Sault are not the Bay Mills Community when it comes to the
settlement act. They argue the Sault can set up an account to collect
interest on the settlement money and buy land for a casino with that.

“Any lands acquired using amounts from
interest or other income of the Self-Sufficiency Fund shall be held in
trust by the Secretary for the benefit of the tribe,” a provision reads
in the Sault’s section of the act. The act does not include this
provision for the Bay Mills Community. Basically, Wernet argues, the
Department of the Interior will have no choice but entrusting the land
to the Sault Tribe once it’s purchased from the city using interest,
allowing for a casino.

“Bay Mills doesn’t have a provision like
this in their statutes. They didn’t have a choice to pursue mandatory
trust,” Wernet said, adding that perhaps it was excluded because the
“circumstances, culture and government is different” for each tribe.

Wernet went on to admit: “I was not
familiar with this very specific provision of the Michigan Indian Land
Claims Settlement Act that is really unique to the Sault Tribe. But the
language seems very clear and very compelling.”

Yet, theories from legal experts aren’t
hard to come by and often differ. The narrative shaping up around the
city’s casino announcement is between the believers and the
non-believers of the city’s and the Sault’s legal theory: Those who
believe a casino in Lansing is possible and those who don’t. Arguments
about the potentially positive and negative impacts of a Lansing casino
— culturally, socially, economically — are moot if the casino’s
proponents can’t conquer the main legal hurdle.

The city’s opposition, namely the
Saginaw Tribe of Chippewa Indians, hired an experienced Indian gaming
attorney, Philip Hogen, who chaired the National Indian Gaming
Commission for seven years to consult on this issue. Hogen, a South
Dakota-based attorney, said the Land Claims Settlement Act should be
taken in the context of the federal Indian Gaming Regulatory Act of
1988. That act specifically makes “crystal clear that tribal gaming can
only occur on what is tribal land,” Hogen said.

“The Sault Tribe as well as Bay Mills
are governed by the Michigan Indian Land Claim Settlement Act, which
was intended to permit them to enhance their land claims,” he said.
“But to go any place and every place in Michigan is far beyond what
Congress intended in that scenario. To do this — to bet the farm, so to
speak — and to build hopes that this will work before those lands fall
into that category is a little disingenuous.”

Hogen is concerned a ruling in favor of
the Sault and Lansing could “open the floodgates on a questionable
legal theory” for a rapid expansion of Indian gaming facilities.

When asked who has the most to lose in
all of this, Hogen said: “Basically the whole gaming industry. The
integrity of the Indian gaming industry is so important — that’s what
has made it the economic miracle it has become. We haven’t abused that
privilege. If and when we look for loopholes different than what the
original intention was — in consequence, if they can do it wherever
they want to — statewide gaming no longer provides the ability for the
tribe to build and sustain economic development through the gaming
industry.”

Matthew Fletcher, a Michigan State
University law professor and director of the Indigenous Law and Policy
Center, said “it seems so fanciful” to rely on the Michigan Indian Land
Claims Settlement Act as the city’s and Sault’s argument. “It boggles
my mind this kind of money, revenues and promises about jobs are being
made in the paper given the incredible uncertainty of the legal
situation. But, anything can happen.”

Fletcher is a member of the Grand
Traverse Band of Ottawa and Chippewa Indians, for which he said he has
“done a little work” in the past, including at times when the Grand
Traverse Band had testified against other tribes coming downstate. The
Sault Tribe is based in the Upper Peninsula and operates five casinos
there, but Fletcher said the Grand Traverse Band is “officially neutral
when it comes to these sorts of things.”

Wernet, of the Sault Tribe, offered a
couple of possible scenarios of how this will move forward, both of
which involve several years of waiting on federal approval and
potential litigation. First, if the U.S. Department of the Interior
denies the application for holding the land in trust, Wernet said the
parties would likely appeal the decision. If it is approved, Wernet
said it’s likely that opponents will file suit against the tribe in
attempts to block it.

Fletcher said the Interior Department’s
review process takes at least two to three years. “And the secretary’s
decision is ultimately a very political one. The politics is just
brutal when it comes to off-reservation gaming.”

Meanwhile, a development agreement is
drawn up and Smith, Lansing’s city attorney, speculated the Lansing
City Council would vote on it in March. It’s also worth noting that the
Sault is paying the city’s legal fees and that the city is indemnified
so that “when or if a lawsuit develops, the city is held harmless,”
Smith said.

Redrawing the Stadium District

For planning’s sake, let’s just say the
Sault is granted approval from the Interior Department, the tribe’s
opponents lose in a lawsuit to appeal the decision and Kewadin Lansing
Casino becomes a reality.

The city estimates 2,200 jobs, $5
million to $6 million in four-year scholarships for Lansing high school
graduates and $1.2 million for police and fire protection will stem
from the plan. The school and public safety money would come from a
small percentage — 2 percent and 1/2 percent, respectively — of net
wagers, which is the total money wagered at the casino minus what is
paid out to winners. Following a temporary casino on-site, the ultimate
goal is to build a permanent casino with a nearly 300,000 square-foot
imprint on prime waterfront real estate downtown. That would include
about 2,900 parking spaces, but an obvious question is: Where would all
these visitors stay? Wouldn’t people be interested in staying overnight
within walking distance of the casino?

The Radisson Hotel across the river from
the site has 256 rooms. Yet, even on a big Michigan State University
football game Saturday, the Radisson is booked up.

“Neither the city nor the tribe are in
the hotel business” and plans for either parties to build a hotel are
nowhere in the development agreement, Smith said. Further, an agreement
between the city and the Radisson prevents the city from subsidizing
another hotel likely until 2018, Smith said. But that doesn’t prevent a
private developer from building one. “If someone wants to come in at
market rate, then God bless them,” Smith said. “We’re truly not in the
hotel business and don’t need to be.”

Bernero said Sunday that “we expect the
private sector will come up in all sorts of ways,” when asked about the
prospect of another downtown hotel.

One of the more than 100 people on hand
at Monday’s casino announcement was local developer Pat Gillespie.
Gillespie has a natural stake in this whole plan because he owns the
land adjacent to the City Market (just north of the planned casino
site) and also across the street north of Cooley Law School Stadium.

Gillespie announced his “Market Place”
and “Ball Park North” development plans years ago that included
several-story, mixed-use buildings and apartments on these properties.

Those plans may fall by the wayside if the casino deal happens, depending on what the market demands, Gillespie said.

“We’ll look for uses that complement a casino,” Gillespie said. When asked if that could include a hotel, he said: “I hope so.”

Gillespie said he’s been considering
different uses than what was originally planned for eight months, which
includes “450 to 500 emails going out.”

Indeed, Bernero is pitching the idea not
just as an economic boon and a potentially historic transformation of
the Lansing School District, but also as another card in the city’s
entertainment deck. Yet some argue that casinos aren’t the healthy kind
of entertainment; that they further gambling addiction; or that they
are a regressive tax on lower income populations.

Former Mayor David Hollister — who
Bernero said would be leading the Lansing Promise scholarship program
as part of the casino proposal — was against a Lansing casino when
rumors surfaced about one during his administration and again last
January. Hollister could not be reached for comment for this story, but
he told City Pulse last January: “I don’t think it’s an appropriate
economic development strategy. … Gambling would be a diversion, a
sideshow with lots of downsides as far as addiction and impoverishing
people. It over promises and under delivers.”

Bernero argues Lansing’s casino would be
different. “A lot of casinos in the state are slapped up and city life
develops around the casino. In Lansing, it’s the opposite of that. The
casino will augment the entertainment district,” he said Sunday. “It
kind of rounds us out. It’s not as if we have nothing here without it.”

Bernero believes a casino is merely
entertainment, no different from the lottery or online poker. “We look
at it as part of a strong, diversified local economy. It is worth our
investment of time and energy.”

When asked about the mounting opposition
to his plan, Bernero says it’s merely “sour grapes. They want to hoard
the benefits and think a monopoly on this is a good thing,” he said,
referring to other tribes. “They want to keep it all to themselves. I
guess all that kind of greed is human nature, they don’t want us to
have a piece of the pie. Well, too bad. We think Lansing’s time has
come.”